Ontario elections focus on many issues—but the rising cost of electricity is becoming the main subject of an “insanely charged political discussion” today

Ontario’s solar industry took off under the FIT and MicroFIT programs and has continued, though at a slower pace, with the growing adoption of net metering and behind-the-meter systems. Both have a place.

“The fundamentals of solar energy are very strong,” says Wesley Johnston, Vice President of the Canadian Solar Industries Association (CanSIA), “and demand from consumers continues to go up.”

But potential users might not get to the fundamentals if they see excessive regulations and uncertainty around returns.

Last year the net metering rules changed, in what most see as a positive way, to remove the cap on installation size and allow storage integration.

In addition, third party net metering is legislated to take effect this October, which will open new opportunities for ownership and financing.

Meanwhile, IESO is conducting pilots on virtual (off-site) net metering. Some see the prospect of aggregators, including community co-ops and aboriginal communities, being able to share scale benefits with their members.

Danny Mueller, of PV supplier Frankensolar, is confident “the financials on net metering make sense,” and many companies are succeeding in this space. But why aren’t we seeing it really take off?

Mueller says one reason is that microFITs are still being built, and another is that solar—under net metering—requires a different sales approach toward homeowners and businesses.

Moreover, uptake of net metering is ultimately a function of the cost of electricity, which remains too low to really drive users. Politicians don’t help when they play off the cost of power; programs like Ontario’s Fair Hydro Plan, which dropped prices for homeowners some 25 percent in 2017, generally discourage participants.

“I’d like to see that gone”, says Mueller.

But PV is also getting cheaper, especially with new incentives like the Green Ontario Fund (GreenON) planned rebates of $1/Watt for residential PV and $0.75/W for commercial, with additional incentives for storage ($0.50/W) and off-grid installations ($3.00/W total). Funded through Ontario’s Cap and Trade auctions, this program could do a lot to boost PV markets.

“The industry and CanSIA is really excited about this,” says Johnston, noting CanSIA worked hard to lobby for the rebate.

But Ontario’s solar industry knows not to get too excited in an election year.

PC party leader Doug Ford has promised to shake up the electricity file, starting with an additional 12 percent decrease on hydro bills, to be achieved by shifting conservation programs to the tax base and using “hydro dividends” to reduce charges. He also intends to cancel “future energy projects”—through which projects he has in mind is not clear. Ford says these moves will provide savings of $173/year per household—though with some costs showing up again on the tax bill.

Most significantly, Ford also promises to scrap Cap and Trade, a move that would undo the GreenON rebates on PV and storage, along with many other green initiatives. It would also cost the Province the $1.9 billion per year it expects to raise through auctions. On top of that, it would be legally difficult, slow to complete, and likely expensive.

Unsurprisingly, the NDP is also targeting electricity costs as a campaign issue. A year ago the party was proposing to cancel contracts where it could, eliminate mandatory TOU pricing, and buy back the 30 percent of HONI—now 60 percent—that’s been sold by the Province. How the NDP will do this and still reduce bills by 30 percent remains to be seen.

Through it all, though, no party has stated any intent to repeal the Fair Hydro Plan or to change net metering rules. That’s probably smart on their part.

“Solar is very favorably viewed by voters and it plays an important role in regard to cleaning up the grid—but more importantly in moving the Province toward an innovation economy,” says Johnston.

So how much should we count on these pre-election statements?

As former Finance Minister Dwight Duncan recently opined, “None of our political parties is telling the truth about the electricity situation in Ontario,” especially around the true costs of electricity.

This is a shame, at least when it comes to PV because the truth is it’s increasingly competitive as a supply choice, but regulations and uncertainty continue to hold back participants.

Johnston believes the removal of these barriers “could help to reduce soft costs, which will help to make solar even more economical and more cost competitive, making solar more accessible to Ontarians.”

No doubt the proposed GreenON incentives would help, as Derick Lila, Founder and Editor at pvbuzz.com suggests.

“The entire solar sector is bracing for the outcome of this years’ elections,” he observes. “The proposed incentives are too good to ignore, and will potentially be a much-needed boost that will help grow the Ontario solar industry under net-metering.”

The Green-ON Challenge will provide up to $300 Million for businesses aiming at GHG reduction in buildings or in the production of goods. To be considered, you must apply by May 25, 2018.

Ontario’s Cap and Trade program, which came into force at the beginning of 2018, is expected to generate up to $1.9 Billion annually for the Province’s coffers, all of which is legally bound to be directed toward additional GHG reducing initiatives. Ontario’s proceeds of the auctions, held jointly with Quebec and California, are first directed to the Ontario Greenhouse Gas Reduction Account (GGRA), and a portion of these will be delivered through the Green Ontario Fund.

The Green Ontario Fund is mandated to stimulate the development of industry, trades and business undertakings in the province that further the deployment of commercially available and proven technology that reduces greenhouse gas emissions by, amongst others, “[identifying] market barriers inhibiting the deployment of that technology and addressing those market barriers”.

The Fund is now inviting participants to submit “big ideas for reducing greenhouse gas emissions” in buildings and the production of goods.

The GreenON Challenge will harness the creativity and expertise of businesses and organizations with the aim of achieving lasting change through the creation of a strong, innovative and competitive low-carbon economy.

The program is focused on projects that identify and propose a solution to a market barrier in deploying commercially available low-carbon technologies and/or improving processes in buildings or the production of goods.

Ineligible organizations may form part of an eligible organization’s project implementation team but cannot be the lead applicant.

The Green Ontario Fund encourages partnerships / consortiums to apply, however, one eligible lead applicant must be identified.

What you can get

The Green Ontario Fund could invest up to $300 million in the GreenON Challenge, beginning in 2018-19, pending the review of projects by potential applicants. Project funding will be considered on a case by case basis.

Submit your idea using our online form below, with the PDF attached, by May 25th, 2018.

Please note that the Expression of Ideas submission deadline has been extended to Friday May 25th.All questions must be submitted to Challenge@greenon.ca by May 1st.All answers will be provided by May 7th.No communication is permissible between GreenON and proponents between May 8th to May 25th.

Following evaluation of the applications, shortlisted applicants will be invited to submit a full business case, which will require supplementary information on financial and technical elements of the project. This process may be staggered.

Since the closing of Ontario’s Feed-in Tariff Program, the Community Power sector in Ontario has struggled to identify a clear path forward. Many of Ontario’s RECs (Renewable Energy Co-operatives) have kept busy developing their FIT pipeline, or even acquiring projects already under contract.

Here at LIFE we’ve competed the building out of our projects – most recently the Moorefield Wind Project - and while we’re pleased with what we’ve accomplished to date, we’re also thinking hard about the next steps for our co-op, and for the community power sector in Ontario.

It’s worth reminding ourselves that LIFE was among the earliest RECs, and even before the FIT program was drafted, LIFE’s volunteer Directors were pushing to move the clean energy file forward in Ontario. When the FIT emerged with the 2009 Green Energy and Green Economy Act, Ontario’s co-ops finally saw a clear and viable business opportunity that would enable communities to pool resources to develop innovative energy projects.

The lesson here is in the fact that it was only through substantial community efforts that we saw the emergence of policies that enabled “community power” to grow in Ontario. We saw our goal well before we had a policy that would enable us to get there.

(Of course we owe a lot to political champions like George Smitherman, who led the charge at Queen’s park, as well as leaders from OSEA, the Toronto Renewable Energy Co-op (TREC) and the Community Power Fund (later by the Community Energy Partnerships Program, or CEPP, now the EPP), along with allies from Germany and Denmark, who showed us what was possible.)

Ontario’s FIT program presented opportunities, and also challenges, and many participants were challenged by the timing of the FIT windows, the intensive paperwork, and in trying to finance projects in Ontario’s young market (financial institutions were initially very wary of renewable energy projects). When the rules were changed in 2012 to give additional advantage to co-ops (along with aboriginal communities, and in 2015, municipalities as well), co-ops and others took up the chance to participate, with most subsequent projects involving some degree of community participation. In FIT 5, the last round, roughly 125 of the total 150MW contracts awarded were given to community projects (with the vast majority of projects being solar PV).

Going forward, we see new grid-tied prospects for “LIFE after FIT” in areas of community net metering and electricity storage, and possibly in the development of micro-grids, which may be getting a boost from the expanding reach of blockchain technology.

Net metering (NEM) allows a generator to export their excess energy to the grid, and to draw energy when needed, and to be billed only for the net consumption (plus any fixed charges). NEM is currently available to any regular metered homeowner or business account in Ontario. But under current regulations, the account holder (usually the building owner) must also be the generator (i.e. the entity that owns and operates the generating facility), which means the co-op cannot participate as a “generator” (as it must, under the Co-op Corporations Act).

However, we are anticipating updates to the net metering regulations this year, which are expected to enable third-party ownership as well as pilot projects for virtual net metering. This combination could, when fully implemented, allow a co-op project to offset the consumption of members’ accounts on a net metered basis, thus expanding the benefits of net metering to persons whose homes are not suitable for generation (such as condo owners, or renters) and gaining the cost benefits of larger-scale installations.

Energy storage offers another promising opportunity, especially as prices have declined significantly in recent years. Storage of electricity most commonly uses batteries, including lithium-ion, although other technologies exist (such as flywheels, pumped hydro, or hydrogen). Regulations changed in mid-2017 to allow storage to be integrated alongside net metering; however, since net metered accounts apply a blended rate for power (as opposed to time of use), there is no opportunity to benefit from arbitrage (i.e. by buying power off peak and sending it back during peak times).

Still, electricity storage is an important component of a modern grid with substantial renewable energy generation, and is essential to manage renewable energy fluctuations as their contribution increases. (Note that hydro can often adjust to these fluctuations, but in Ontario we apply natural gas generation as well, especially to satisfy summer mid-day peaks. Thus gas is the principal remaining greenhouse gas contributor in our electrical system.)

We expect to see more additions of storage based on the rollout of Ontario’s Long Term Energy Plan, which provides a 20-year roadmap for the energy sector. We’ll continue this blog soon with more information on the LTEP, as well as other Federal and Provincial initiatives including Ontario’s Climate Change Action Plan, that may suggest new opportunities for LIFE to continue advancing community power in Ontario.

LIFE After FIT: Ontario quietly pulls the plug on its Feed-in Tariff Program

Ontario quietly shut down a key component of its renewable energy policy last month, marking the end of a largely successful - if often contested - effort to change Ontario’s energy landscape.

Tucked within a December 16 directive (PDF) from Energy Minister Glenn Thibualt was an change to the FIT schedule set in 2013, to shave off the final year of the program. The directive states that “the IESO shall cease accepting applications under the FIT Program by December 31, 2016, and any unallocated procurement target as of the end of that procurement process will remain unallocated.”

And so, without any kind send-off, ends Ontario’s seven-year experiment with building renewable energy under fixed-rate tariffs.

LIFE Co-op has been fortunate to have won a number of solar contracts under the FIT in 2014 (our FIT 2 projects), which are now generating power and revenues for the co-op and our partners. Our newest project, Moorefield Wind, received its FIT 4 contract last year, and looks on schedule to be connected within the next few months. (To learn how you can invest in this project please see our investment opportunities, and consider attending one of our upcoming investor information sessions.)

In view of the program's initial goals – reducing emissions from power generation, kick-starting a green energy economy, and harnessing private investment to build out new electricity infrastructure – the FIT has been an important and largely successful initiative, and its achievements are worthy of some celebration.

Smog alerts, once all too common in the Golden Horseshoe, are now a true rarity. In the business sector, thousands of jobs have emerged in the renewable industry – though many have since disappeared as the program scaled back from its initial grandeur. And clean FIT-contracted wind, solar and biogas today produce a significant portion of Ontario’s electricity from privately financed facilities.

But the FIT has also seen its share of controversy, especially related to concerns over Ontario’s large wind projects, most of which are FIT contracted, and the rising costs of electricity for homeowners and businesses (only a fraction of which is due to the FIT). These issues, fanned by both political opponents and citizens' groups, have cost the Liberal Party significant voter support, in rural Ontario especially.

No doubt the starting FIT rates were very high, and contracts were eagerly grabbed up by local and international proponents; more than 4200 MW was contracted under the first round of the program (FIT 1). Sensing it may have served up too much of a good thing, and the government hit the brakes, engaging in a review process that effectively stalled the program for almost two years, and ended with the release of much slimmer program. Subsequently, from FIT 2 to FIT 5, only 750 MW of contracts were (or will be) issued (see Figure 1).

Figure 1: FIT Procurement 2010-2016

Source: IESOProgress Report on Contracted Supply (Q3 2016)

Rates paid under the FIT were also trimmed, especially for solar, which has been reduced by well over 50% across the board (prices vary depending on ground or roof mounted, and also according to the size of the project). Yet even while rates have been falling, each of those rounds has been oversubscribed; generally, applications are submitted representing 2 to 3 times the kW that would be contracted. In FIT 5, for instance, applications for almost 400 MW were received, when only 150 MW is to be contracted.

But while demand for participation in the FIT has remained strong, the need for additional generation is low. Ontario’s energy consumption has declined every year but one since 2008, and today stands at 1997 levels. The Province’s long-term commitment to nuclear, along with ample hydro resources and excess natural gas infrastructure, means that additional generation is unlikely to be needed for a few years, at least. (The scheduled shut-down of Pickering Nuclear Station in 2020 was delayed last year to 2024, which further reduces the urgency of building new renewables.)

Indeed, together with last year’s cancellation of LRP II (the second Large Renewable Procurement), it might seem the Province has all but abandoned the Green Energy file. However, a revised net metering program will continue – and may even expand into third party virtual net metering and the inclusion of storage. The Conservation First initiative remains in place, with a number of initiatives aimed at reducing demand and pilot projects testing new pricing and non-pricing mechanisms. Additional initiatives include large storage pilots, electrification of transport, and of course carbon taxing, all of which could help enable growth in the renewable sector in years to come.

LIFE will continue to monitor policy changes and seek out new opportunities for its members and investors; for now we're looking closely at prospects in the area of net metering, and considering prospects for electric vehicles, thermal energy generation, and even retailing for the behind-the-meter and off-grid market.

We look forward to hearing from members and others who want to help write the next chapter of our story: “LIFE after FIT”.

Though 2016 may not have been the world's cheeriest year, overall the year has been quite a success for our small community-owned renewable energy co-operative!

2016 was LIFE's 10 year anniversary, and so we celebrated this summer with a fantastic BBQ and potluck with our members. We also used that happy time to announce dividends, so lots of celebration all around!

On the solar front, all 18 of our solar projects are officially up and running, with the last of the paperwork wrapped up early this year by our fantastic manager Shane Mulligan. Through the partnerships we have across southwestern Ontario, our projects are producing 3010 kW, or enough to power 345 homes!

Moving on to the wind front, we moved forward massively on the Moorefield Wind Project. We received a contract with IESO under FIT 4 in the summer, put up the wind turbine in October, and had our offering statement approved in November. Now anyone can purchase shares in the Moorefield wind project through our new offering statement. We are hoping to raise at least $350,000 in A.3 shares over the coming year.

So 2017 is shaping up to be a busy time for us on the board of directors as we aim to link members and non-members with the Moorefield wind project. We'd love for people to get in touch with us about this opportunity - and you can check out more information about A.3 shares here.

There's a special pleasure in seeing a smile on a friend’s face, and knowing you had a role in putting it there; so it was seeing Bill Roubos’ reaction to the work on his farm this past week. “I’ve seen lots of these go up”, he says casually, referring to the 65 m turbine tower rising, in five “lifts” over 5 days, on his 180 acre farm near Palmerston. Indeed, as former head of Moorefield Excavating, and owner of Roubos Wind Energy, Bill has been involved in his fair share of wind projects in Ontario, the USA, and Europe. But it’s clear this one is different. For one thing, the Moorefield Wind turbine is (literally) in his back yard. And this wind project - given the challenges of Ontario’s energy regulations – has been some nine years in the making, with Bill overseeing every aspect of the process. This week saw the most visually satisfying step in bringing Bill’s vision to a reality, and his face was a mixture of pride, satisfaction, and at least a touch of exhaustion. “If I knew all that was involved I’m not sure I’d ever have started this,” he says. “But it’s great to finally see this happening.”

John Hogg, of Free Breeze Energy (http://freebreeze.com/Home.html), of Listowel, ON, has been helping Bill with the project since the beginning, and he was on hand throughout the lift. John generously explained to me many of the technical details of the process, and we hope to put together some video clips that will let him tell the story in his own words. Carlsun Energy (http://www.carlsun.com/index.html), of Port Elgin, brought its experienced team to manage all aspects of the lift, from cleaning the parts to guiding them with tie-ropes as they rose around the crane. They worked closely with the crane crew from Mammoet (http://www.mammoet.com/), a global firm with a big shop in Ayr, ON, not far from Kitchener. Though the winds slowed the process, the crew still managed to finish up before the big winds arrived Thursday.

For LIFE Co-op, of course, this is a milestone too. LIFE’s dream of a turbine began in 2006, and our early logos show the vision – “Fostering community investments in sustainable energy to reduce our environmental footprint” – saw a wind turbine as a fitting monument to the vision of sustainability. Our first attempt at a wind project near St Agatha unfortunately did not get off the ground; LIFE reluctantly pulled the plug on it in 2011, and shifted to solar in an adaptation to changes in the FIT Rules. So it was pretty exciting to be able to help Bill with a new FIT contract, as his FIT 1 contract had terminated before he was able to get the turbine up. The current contract, a FIT 4, is held by Moorefield Wind 1 Inc., a company owned 51:49 by LIFE and Roubos Wind Energy. Although somewhat less lucrative than a FIT 1, this contract should still enable a simple payback of less than 12 years, while the project eliminates over 200 tonnes per year of carbon emissions.

LIFE is enabling its members and investors to have a part of this project through the purchase of Series A.3 investment shares; we are projecting returns to investors in the range of 5% to 5.5%, with dividend payments starting as soon as 2018.

Join us at our Annual General Meeting (https://kitchenerwaterloo.snapd.com/#/events/view/999742), or contact us at invest@lifecoop.ca, to learn more about how (and why) to invest in LIFE!

Mr. Roubos spent years trying to get a wind turbine on his property. He got a FIT Contract Offer, but was not able to construct all the pieces in time. He asked for an extension of his FIT contract offer, but this was not allowed. The wind turbine pieces were laying in his field for more than two years. In partnership with LIFE, we applied for a second FIT contract in September 2015. We received notification that we got the contract at the end of the August 2016.

This is a fantastic investment opportunity! Class A.3 shares are now being sold to financefinal development and up to 25% of equity ($350,000 est.).